Sometimes the best trade is not to trade at all. Knowing when to trade and when to stay away from the markets is a key factor in a trader’s success. There are times when participants should proceed with caution to the Forex markets, especially during trading sessions where currencies are traded in greater volume. Here, brokers and traders are spurred to trade even more. A greater understanding of the forex market hours can help one know when and when not to trade.

Forex trading depends on the country—or rather the market—where currencies are exchanged. Live trading in the United States will have different characteristics as compared to a trading session in Japan. However, these differences are minor, and they come in terms of market trends, volatility and the volume of currencies traded. Different countries trade at different times of the day. These trading periods (also referred to as trading sessions) are determined by the time zones.

Different countries trade at different times of the day. These trading periods are referred to as trading sessions, and they are determined by the time zones.

Trading sessions in Sydney, Australia and Tokyo, Japan run at different times as compared with sessions in New York or Toronto, with the only exception being the overlapping period. Simply put, the trading sessions link; when the New York sessions ends, the Sydney session begins.

As each session is located in a different country, they all have different trading times.

Trading Sessions

Trading Sessions

Opening Times (New York Time)

Overlapping Sessions

Opening Times (New York Time)

London:     

03:00 a.m. – 12:00 noon EDT

London and New York:  

08:00 a.m. – 12:00 noon EDT

New York: 

08:00 a.m. – 17:00 p.m. EDT

Tokyo and Sydney:

19:00 p.m. – 02:00 a.m. EDT

Sydney:      

17:00 p.m. – 02:00 a.m. EDT

Tokyo and London:

03:00 a.m. – 04:00 a.m. EDT

Tokyo:        

19:00 p.m. – 04:00 a.m. EDT

 


There are three major forex trading sessions—the American session, the Asian session and the European session. The forex market is usually open for 24 hours a day, five days a week. When a session is open, different institutions are free to trade in currencies. All exchanges are done within the current trading period. However, an overlap period—when two or more trading sessions in different continents are open at the same time—can have a strong effect in the markets.

There are three major forex trading sessions—the American session, the Asian session and the European session.

At this time, the Asian session may share an hour of trade with the European session. Overlaps usually change the conditions of the markets and altogether alter the trade dimensions. This is because there is bound to be more liquidity in the market due to the increased amount of traders who are active in the market and trading. More currencies are traded at this point, and generally these periods tend to be a good time for day traders brokers, and banks. Risks are less and pairs on currencies are reduced.

During an overlap, there is usually frenzied activity in the forex market, prices of currency exchanges are volatile, and movements upside and downside are usually very rapid. While such moments may give brokers renewed vigor to trade more, caution is always recommended. This is important because currencies that were previously on a high at the time of trade may perilously end on a low, or vice-versa.

Some trading session’s overlap; more currencies are traded at this point, prices of currency exchanges are volatile, and movements upside and downside are usually very rapid.

 

The American Session (New York)

During the American session, volume of trade mostly represents a quarter of the total currency exchanges in the market. The American session usually opens at noon, a time it shares with the London session. Since the two sessions run concurrently until 16:00GMT when the London session ends, there is an increased volume of trade. There are numerous brokers trading at this time and there is generally increased liquidity.

However, when the London session closes, liquidity is reduced as some participants exit the market. From 16:00GMT, the American session continues to trade until the Asian session opens. It should be noted that during American trading session, most currencies traded are in Dollar form.

The New York session is considered open from noon GMT to 20:00 GMT and represents a quarter of the total currency exchanges in the market.

 

The Asian session (Tokyo/Sydney)

In the Asian forex trading session (where major forex markets such as Sydney and Tokyo sessions are represented) volume of trade takes about 25% of the daily total. Singapore, New Zealand and Hong Kong are also some of the forex markets represented in the Asian session. Here most exchanges focus on currency pairs. Brokers trade in currencies such as JPY/EURO and USD/JPY.

Sydney session opens—at 21:00GMT—and at this time currency and stock exchanges are low. This is because Sydney session is the only forex market open at that time. However, the trading volume rises when the Tokyo session opens at 23:00GMT. Liquidity at this time is slightly high. All things considered, the volume of trade and liquidity in currencies at the Asian Session is minimum compared to the American or European sessions.

The Asian session is considered open from 23:00 GMT to 08:00 GMT, and it is minimum compared to the American or European sessions.

 

The European Session (London)

The European session has the highest volume of tradealmost half of the daily total. It opens at 07:00GMT, an hour before the Tokyo session ends. Since it overlaps with the Asian session, there is increased movement in the forex market, as there are many participants trading. Traders in Tokyo are exiting the Asian forex market and entering the day trade at London.

The European session also overlaps with the American session (New York) at 13:00GMT and lasts up to 16:00GMT. The overlap of the Tokyo and New York sessions is what causes the liquidity to be at maximum and increase currency pairs as well. During the European session, currencies paired are EURO/USD, USD/CAD, GBP/USD, and USD/JPY. Overall, the European session (London) is the most volatile forex market and normally all currency pairs can be traded.

With increased liquidity and movement in the forex market, the overlapping hours are one of the best times to trade. However, one should proceed with caution at these times. During national holidays, major international events, or news that affects the forex market, it is advisable for a trader to be cautious while entering the forex market, due to gapping and low liquidity. Volume of trade is usually low, and high expected risks destabilize the markets.

The European session is considered open from 07:00 GMT to 16:00 GMT and has the highest volume of trade—almost half of the daily total.

 

Bottom Line

The forex market is unpredictable. No matter what one may have heard regarding how a change in a single factor will influence prices of currencies, this information cannot be depended upon. Therefore, there are no certainties, and a trade based on assumptions may result in losses. An individual should therefore do a proper evaluation before venturing into the forex market. Proper understanding of the trading industry and the different trading sessions helps one make an informed decision as to when to trade and when not to trade.

 

Summary:

P

Different countries trade at different times of the day.

 

P

Some trading session’s overlap; more currencies are traded at this point, prices of currency exchanges are volatile, and movements

upside and downside are usually very rapid.

 

P

The New York session is considered open from noon GMT to 16:00 GMT and represents a quarter of the total currency exchanges in the market

 

P

The Asian session is considered open from 23:00 GMT to 08:00 GMT, and it is minimum compared to the American or European sessions.

 

P

The European session is considered open from 07:00 GMT to 16:00 GMT and has the highest volume of trade—almost half of the daily total.

 

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